Popularity on Kickstarter
Kickstarter is one of the only places where the rich get richer and the poor do as well. The crowdfunding website has produced some major success stories over the past couple years. It allows people to essentially choose which products they want to come into existence, and to receive exclusive rewards for backing projects. If a project doesn’t make its goal in donations by the end of a set period, the money is returned with no harm done; it’s a way to cast consumer votes without consequence. It gives projects a chance to succeed where they would normally not even be attempted due to lack of funds – but it’s certainly not guaranteed, as there is a large proportion which fail. So what determines a project’s success on Kickstarter?
The rich-get-richer network phenomenon is the key. Kickstarter projects fit very well into a standard model for popularity: there are few which are wildly successful (either reaching a very high goal or receiving many multiples of their original lesser goal) and many which make a small amount of money or fail entirely. The cited article by Jeanne Pi explores some of these statistics: in fact, only 7% of projects with goals over $100,000 are successful, while 38% of $10,000 projects make their goal. In a sample of 106 campaigns which made over 10x their goal, only 33 had goals over $10,000. Further, projects which succeeded were usually by very small amounts, whereas those that failed did so spectacularly. Obviously, likelihood of success increases for a less expensive project, as fewer people need to back it with lower dollar amounts, but this also relates to the idea that only a small portion can become extremely popular. This follows a similar pattern to virility of websites on the internet, where the vast majority remain fairly obscure and only a few become well known and well frequented. The connection makes sense: Kickstarter can, in some ways, be seen as a smaller model of the web with a more quantifiable measure of popularity. The campaigns which are highly successful have a wide audience and a great deal of exposure, while those that fail usually do so because not enough people know that they exist (no matter the project, it’s likely that there are enough people in the world who would back it – but they have to hear of it).
Network effects play a large part in this, since the most important factors for success are momentum and virility. Just as it’s difficult to oust a chronologically earlier, widespread service from the market, it’s difficult for an obscure Kickstarter campaign to take off if it doesn’t do so immediately. As the above graph shows, campaigns become far more likely to succeed if they have already reached a certain percentage of their goal: the hard part is getting enough initial backers. If a campaign can get an early foothold and reach enough ears, then that’s more current backers to tell others about the project (after all, they have a direct benefit – the product or service coming to fruition – if the goal is reached), and news of the project can spread very quickly. How does one get this initial push? They have to have enough immediate connections to fund the entire campaign, or access to and influence on a cluster of people with their own network connections. The latter is much more likely: for a $10k project, it has a 9% chance of success if the owner has 10 Facebook friends, 20% for 100 friends, and 40% for 1000. If the owner of the project can convince enough people in a network to fund the project (similar to adopting a new product on the market), then the people they are connected to will have information access to the project as well. This can even cause an information cascade, as people who are only somewhat interested in a campaign may decide to back it if they see that many others already have, assuming that the current backers have good reason for supporting it.
Source: http://venturebeat.com/2012/07/17/the-untold-story-behind-kickstarter-stats-infographic
–Enayla